Billionaires Soros, Bacon cut gold holdings as price slumps

Global gold investment, including bars, coins and ETPs, dropped 8.3% to 424.7 tons in the fourth quarter from a year earlier, the World Gold Council said in a report yesterday. Full-year investment slid 9.8 percent to 1,534.6 tons, it said.

The Standard & Poor’s 500 Index climbed to a five-year high yesterday and has surged 6.7% in 2013. The gauge has more than doubled since bottoming in March 2009 as the U.S. Federal Reserve conducted three rounds of bond buying to lower interest rates, boost growth and support the labor market.

The U.S. central bank will keep purchasing securities at the rate of $85 billion a month, according a statement from the policy-setting Federal Open Market Committee on Jan. 30. Gold may have a sharp rally as investors seek so-called real assets, Elliott Management Corp., the hedge fund founded by Paul Singer, said in a document accompanying its fourth-quarter report on Jan. 28, a copy of which was obtained by Bloomberg.

‘Come Back’

While people would rather invest in “economically sensitive commodities and equities” as data improved, “we may see people come back to gold if troubles in Europe get worse and problems in the U.S. reappear,” said Adrian Day, who manages about $160 million of assets as president of Adrian Day Asset Management in Annapolis, Maryland.

Germany’s economy, the largest in Europe, contracted 0.6% in the fourth quarter, and French GDP dropped 0.3% , according to data this week. Japan’s economy, the world’s third largest, is in recession after contracting an annualized 0.4% in the final quarter of 2012, following a revised 3.8% fall in the previous three months.

Michael Vachon, a spokesman for Soros, was not immediately available when called for comment and did not reply to an e- mail. Armel Leslie, a spokesman for New York-based Paulson & Co., which manages $18 billion, declined to comment. Kenny Juarez, a spokesman for Moore Capital, also declined to comment.

Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

“The economy is looking better, and people are moving to more remunerative assets like equities,” Paul Dietrich, chief executive officer of Foxhall Capital Management Inc., said in a telephone interview from Alexandria, Virginia. “A lot of people have lightened up on gold.”